For many organisations, outsourcing does not deliver its expected benefits. PA’s recent sourcing survey found that over 25 per cent of outsourcing relationships fail to achieve the required outcomes.As a result, many executives and service users are challenging service providers to improve their performance and competitiveness.
At the same time, however, a large number of organisations are unsure of what actions they themselves need to take to improve the service they currently receive. Many focus on contract terms, service levels and procurement processes, where improvements can only lead to modest improvements.
To secure dramatic improvements in service, leaders need to start thinking more widely about how the services they receive can be improved. This may involve challenging conventional wisdom and working methods, both within their own organisation and across supplier portfolios.
Establishing a clear vision of service excellence
To provide focus for action and justification for change, leadership first needs a clear vision of what constitutes excellent service and what the true drivers of great service really are. This vision needs to:
address all the key areas required to build success, including not only performance but also the environment, the people and the relationships with and between suppliers
look inward at the organisation’s own capability as well as outward at how well it understands the needs of its service providers and supports their competitive efforts to succeed in the marketplace.
Addressing the challenge of service integration
Secondly, the prevalence of multi-sourcing means any leaders striving to secure service excellence must address service-integration issues. The organisation is responsible not only for making sure services fit together and are delivered, but also responsible for managing the significant additional risks that stem from multi-sourcing. In many organisations, however, this is not happening. Often this is because organisations are not sure how to address service integration or they simply do not have the capability necessary to do it effectively.
Breaking with convention
Finally, success depends on leaders being prepared to make strong decisions and drive through necessary changes. In our experience, businesses that are prepared to break with conventional methods are more likely to induce valuable change. This might mean changing an established supplier mid-term, moving or replacing key people in the organisation or radically overhauling an approach to supplier management.
This approach is exemplified by the recent actions of two of our global clients with the benefit of our help. Both decided to replace major incumbent service providers mid-term, even though it would have been easier to continue as things were, with only gradual service improvements. Making changes gradually, however, would not have addressed the requirements of the two businesses, both of which required significant service uplift, better value for money and relationships with partners that could truly support the businesses’ needs to change and modernise.
Having made the decision to change suppliers, the key to success was to acknowledge the scale of the change required and the amount of risk involved – which was significantly greater than a traditional re-sourcing at the end of a contract term – and then plan and manage accordingly.
PA’s experience is that, in a rapidly changing business environment, for organisations that want to secure service excellence, taking no action is not an option. Bold leaders that take calculated risks and drive change will take their organisations to new levels of success.
To find out more about how PA can help your organisation secure a significant improvement in performance from its service providers, please contact us now.